>> rose: welcome to our program. an increasing number of people believe that the debt, the u.s. debt is a biggest problem facing this country. simpson-bowles is perhaps the best known proposal to deal with the debt and the deficit. we are joined this evening by alan simpson the former senator and erskine bowles, the former chief of staff of president clinton. >> we face the most predictable and also luckily the most avoidable economic crisis in history. nobody disputes the arithmetic, fiscal path we are on is simply not sustainable and the deficits are like a cancer, they are really going to destroy the country from within. and the arithmetic is easy to understand. and if you take just last year, charlie you don't have to go back 20 years ago or 20 years hence, 100 percent of the revenue that came into the

country, every single dime of it was spent last year on interest on the debt and these mandatory spending, mandatory spending is principally the entitle programs, medicare, medicaid, social security that means every dollar we spent last year on these two wars, on homeland security, on education, on infrastructure. >> rose: money we didn't have. >> yes. it was borrowed. >> rose: we would have to borrow it. >> half was bore red from foreign countries, that is like crazy, so at the end of this year, you know, we have a crisis we are facing, we have got all of the bush tax cuts expiring that is about a $3.9 trillion economic hit, so where do you stand on letting the bush tax cuts retire. >> to reduce the deficit or as a bargain tool. >> i never would have voted for them in the first place in the senate because what you coevery time you are in the u.s. senate, to assure yourself of reelection is wait until a surplus comes along and the last guy to balance the budget was this guy,

and then a surplus came in to being and when the surplus comes to being the staff of the person who wants to be president of the united states on the floor of the senate says now go for a tax cut, and you are going to be -- you are going to get there, it was absurd, we have two wars going with no tax to support them, the first time in our history, even the revolution we had a tax to support -- we had a healthcare plan, pharmacy plan with no revenue stream, madness. >> rose: alan simpson and erskine bowles for the hour. >> funding for charlie rose was provided by the following.

>> rose: additional funding provided by these funders. and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: erskine bowles and alan simpson are here, in february of 2010 president obama pointed to to do chair his bipartisan deficit reduction commission. they were tasked to lay out recommendations to reduce our

deficit and balance the federal budget by 2015. the final proposal offered to cut more than 3.8 trillion over ten years, the simpson-bowles plan failed to achieve a majority and never came to a vote in congress. since then this proposal has been widely debated and seen as a model for real deficit reduction. erskine bowles was white house chief of staffs in the clinton administration, he helped negotiate the last major bipartisan budget agreement in than 77, mr. alan served as united states senator from wyoming to 1979 to 1997, he also served as senate republican whip for ten years. i am pleased to have both erskine bowles and alan simpsons with me to talk about one of the most important issues facing this country in a long time. where do you think we are with respect to getting at the deficit that you have so, so well-defined as the big issue facing the country? in the 2013 budget proposals that are on the

table? >> charlie, i would say that any of these budget proposals that don't reduce the deficit by at least, at least $4 trillion over the next decade, because that is the minimum amount you need to stabilize the debt and get it on a downward path is, as percent of gdp any that don't do that and don't address defense, any that don't address medicare, medicaid, social security, and don't reform the tax code and aren't balanced in some way between that aren't serious. >> rose: then why do you think people have not come to support bowles simpson? >> because it is politically painful, the problems are real, the solution, all painful. there is no easy way out. and everybody gets the rit me tic and everybody understand it is economics but they have to make tough political choices in order to do it and as long as people are worshipping the great god of reelection then we are going to have a hard time getting to the promised land. >> rose: right. >> and it is very specific.

we don't just babble into the vapors, what we do is go around the country and been all over the united states and we tell them we don't do bs, so pull up a chair and we will say what would you do to cut this problem? and they would say, well get rid of waste, fraud and abuse, all foreign aid, all earmarks, nancy pelosi situate's airplane, air force one, all congressional pensions and that is four percent of the whole but that is what they believe because they don't want to touch medicare, medicaid and the solvency of social security and defense, and there we are. defense budget comes to the house and they automatically add billions to it, not thinking for god's sake that right now we spend 760 billion a year on defense, and the top 14 countries on earth, including russia and china combined, spend 540 billion and they will say, run that past me again, could you, 760 billion is ours, 540 billion, the richest, best other countries in the world, russia, china, 540 billion.

>> rose: we have to do that because of what happened and the conditions for the debt ceiling raising the debt ceiling? >> they are going to have to deal with everything, if you leave out any of the big four, you can't get to where we have to get. you have to have -- you can't -- as erskine says you can't tax your way out of this and cut spending out of this and grow your way out of this, you have to have a blend and it has to be both parties. >> rose: but there is also the president of the united states who appointed the commission who now had you in the white house to talk about this a month ago. >> he did. and, you know, we have had, what do you call it a constructive and frank conversation. >> rose: diplomatic. >> but, you know,. >> rose: so what did he say? >> i have been pretty hard on him as you know because we were very disappointed when we brought the plan to him, having met all the goals, objectives and hurdles that had been set up and not only met them but actually really exceeded them. >> rose: sure. and given a bit of protection. >> yes. >> you had something recommended

by a bipartisan commission. >> yes majority of republicans and deposition, a super majority of the commission and we expected him to be like bill clinton would have been and just say, oh this is great i love it. >> rose: and the chief of staff. so why department he do it? >> he believed and rightly so, that he would have been savaged if he did it, that if he had embraced it, it would have had less chance of success than if he distanced himself from it and he made the strategic decision that the best chance of success of this plan was to use it as a framework for his negotiations with speaker boehner over the summer anise what he did. if he had been politically right, and those negotiations had succeeded he would have been a genius, they didn't work. >> rose: yes but there is also a report by a journalist in "the new york times" magazine, who basically says it was the president after an agreement, after the grand bargain with john boehner came back and said, well, i have looked and thought

this again and i am going to have to change our position. >> i read that. we weren't involved in those can kind of discussions. >> rose: but it is the same kind of strategy by the president. >> well the president, really, i met with president, and he assured me that he would be in support of something that was similar to the general framework of simpson-bowles plan, that he understood we had to reform the tax code, and that we had to reduce not only defense spending but the entitlement programs is what you would consider bold leadership. >> well it is a different form of leadership and what he was trying to do is what he believed would be successful, if i had my choice i certainly would have had him come out strongly in favor of it. >> if the president said look this is a a boy partisan commission, alan simpson a giant republican in the senate, erskine bowles president of the university, former chief of staff of president clinton, these two guys have worked their butt off and i am going to support what they say. i may not agree with everything, but i am on board. would it have made a big

difference? >> it would have made a great difference but he couldn't have possibly done it because anything that he comes up with is automatically rejected by the house, republicans, almost in total, so they are never going to -- he knew that. then you had some conflict within the republicans, boehner wanted to do the grand bargain i don't want to leave this place without having done something as an american, rather than as a republican, and he went back to that caucus, where he had 83 guys that didn't come to limit government they came to get rid of it. so and then you mention taxes, you don't have to raise tacks, you go into that tax expenditures and the tax code start ripping them out one by one, pulling them out like roots. >> rose: cull the deductions out. >> yes and do it in a progressive manner. >> rose: and here is what paul ryan says who was a member of the commission, by the way. he said -- >> and a very good guy, by the way, a very smart, stable, honest hardworking guy. >> rose: here is what he said. the problem with bowles simpson and he said parenthetically i

love alan bowles and simpson -- you have heard this song before, haven't you? >> yes, the music. >> rose: i loverer and alan simpson, the problem is, it didn't tackle healthcare entitlements those are the drivers of our debt, i don't want to sign an agreement i know ducedoesn't picks the problem. >> he made that point crystal clear during our discussions. we cut medicare and medicated, medicaid by about $485 billion over ten years with the hopes that that would slow the rate of growth of medicare to gdp plus one. and then we said gosh if that doesn't work if that is not a deep enough cut then what we have to do is take more drastic steps and one of those drastic steps would include a consideration of a premium support plan like paul recommended or other options but we have to slow the rate of growth to gdp plus one, paul would rather have us go to

something like his premium support plan from day one. >> rose: could you support a premium support plan? >> only, only if by making the appropriate cuts now we couldn't slow the rate of growth. i definitely think it has o to e an option, i think something like the wide ryan plan which is a form of a premium support plan with keeping medicare as an option, if it is a competitive option, is one of the things you would want to consider. but i think you would have to also consider other options. you have to remember too, hinter ling and camp and ryan voted against this. we had their votes, it would have been the 18 so we went over to see them. >> rose: in the commission. >> in the commission it would have been 14. >> rose: and coburn voted for it. >> and dick durbin what an interesting cross-section, three republican senators voted for it so we said why did you vote against this? and i said if you voted against this package because you were afraid of grover norquist shredding you to

threads i lose all respect for you. >> no we just believe if you do what you are suggesting and get rid of the tax expenditure for employer deduction, employee healthcare that employers will look around and blink like a frog in a hailstorm and go to bloat, go to bloat, bloat, obama care and erskine and i looked at him and said that is an honest answer and it was an honest answer they feared getting rid of that in the tax expenditures, that they would bloat, they would all flee and make obama care bigger than it ever was. we were getting rid of all of the tax expenditures so we could broaden the base and simplify the code and used eight opinion of the code to reduce the deficit, about $100 billion a year so that's where we got our trillion dollars over ten years to reduce th the revenue but usd 92 percent of the money to reduce income tax rates that's how we took rates eight percent to seven at this thousand dollars, 14 percent to $210,000 and had a maximum rate of 23 percent and took the corporate rate to 26 percent and

paid for territorial system so that $1.5 trillion is now captured overseas, can be brought back here to create jobs here. we thought that would create dynamic growth but if wow don't deal with this employer exemption for healthcare insurance, you are never, ever going to really take away any of these tax expenditures. >> but even in the house yesterday, you know, you had a proposal by jim cooper from tennessee which basically would reduce $4 trillion over ten years, which use basically based on what you guys said, and hoyer the number two man in the senate didn't vote for it and the house. sorry. >> you can answer that better. stanley has been -- there were guys there that erskine and i both received calls today by a guy who said i couldn't do it but i am ready to still do it. just remember, you can -- your out is perfect here, it was in the form of a resolution. give me some legislative language and that's what i

thrive on and my staff and then i will look at it again, so guess what? we have put this thing in legislative language, 67 page report which is now 800 pages of legislative language so the next go round when somebody kicks that at some appropriate time we are going to say, wait a minute, i didn't like paragraph so and so, section so and so, well, then, pal what is your suggestion, and then you start legislating. so i am -- we have seen dozens of them wondering the campus saying say us from ourselves, that's what we saw the whole year we were wandering around doing our workable, save us from ourselves. tomko burn called and said don't worry about this, he said the first time i introduced the legislation to get rid of the bridge to nowhere. >> rose: right. >> he said i got 15 votes. he said, you know, this isn't the last of the battles this is the first battle and finally -- >> rose: so both of you, after all of the struggle, after all of the hard work, after all of

the time, you believe the country and the congress and the administration will somehow at some point come together, after having tried everything else, and deal with this, the biggest problem that we have? jim baker, said where you statistic, jim baker. >> a wonderful guy. >> statistic here three nights ago and he said, you know, if we don't do something, we are greece. i happen to be bullish on america's prospect in the future and i tell people all the time, never, never, never, ever bet against uncle whiskers because if you do you are going to lose. now, will we decline if we don't get a handle around our debt bomb? you bet we will, we have, you know, people ask me what is the most serious problem facing us today? >> and i say it is the economy, the economy, and the economy. in that order. we cannot continue down this path that we are now on. where we are building a greater

and greater and greater levels of debt. our debt to gdp the next five years is going to be 100 percent simply unsustainable. we have got to get a handle on that or we will be in decline. >> rose: you have said without the reserve, without the dollar being the reserve currency we would be greece. >> that is correct if we didn't have the dollar today, with our debt to gdp, we would be be greece. >> rose: he is absolutely right and that is why we will. we face the most predictable and also luckily the most avoidable economic crisis in history. nobody disputes the arithmetic, the fiscal path we are on is simply not sustainable and the deficits are like a cancer, they are really going to destroy the country from within. and the original me tick is easy to understand. and .. just last year charles will i you don't have to go back 20 years ago or 20 years hence, 100 percent of the revenue that came into the country every single dime of it was spent last

year on interest on the debt and these mandatory spending, mandatory spending is principally the entitle. programs, the medicare, medicaid and social security, that means every dollar we spent last year on these two wars, on homeland security, on education, on infrastructure. >> rose: money we didn't have. >> yes. it was borrowed. >> rose: we would have to borrow it. >> half of it was borrowed from foreign countries. that is like crazy. so at the end of this year, you know, we have got a crisis we are facing we have all of the bush tax cuts expiring about a $3.9 trillion economic hit. >> on cbs this morning, the mayor of new york knows a bit about economics and business. >> yes to say the least. >> rose: says we should let them expire. what do you say? >> you know, i do, but i would have a caveat to that, we ought to let them expire and we also have the senseless, mindless across-the-board cuts that came about as a result of sequester

when the failed super committee that is over $1 trillion so we had $5 trillion of economic events. >> rose: that was to deal with the debt ceiling. >> that are going to hit, which would be disaster if we let that happen, so what i would do if i was the president, i would actually let those happen and then i would turnaround to the republicans and say, okay, now we are going to negotiate. and we don't need $3.9 trillion of new revenue. we need about $1 trillion of new revenue. and so you can let the republicans come back and have a tax cut. >> and if you let them both expire that would give me how much revenue. >> three-point -- about 5 trillion. >> rose: about 5 trillion. so where do you stand on letting the bush tax cuts expire? both as a reality to contribute to reducing the deficit or as a bargaining tool? >> i never would have voted for them in the first place, if i would have been in the senate because what you do every time you are in the u.s. senate so you can assure yourself of reelection is wait until a surplus comes along and the last guy to balance the budget was this guy and then a surplus came into being and when the surplus comes to being, the staff of the

person who wants to be president of the united states on the floor of the senate says now go for a tax cut, and you are going to be -- you are going to get there. it was absurd, we have two wars going with no tax to support them. the first time in our history, even the revolution we had tax to support it, we had a healthcare plan or pharmacy plan with no revenue stream, madness. but what erskine and i do is we don't do charts and powerpoint, you just tell people who don't know what a trillion is and we have 16 of them, 1 16 trillion, you say, well if you spend a buck a second. >> rose: that's the debt we face. >> the deficit is about 1,000,000,000,000.3 but no one understands between the deficit and the debt but the deficit gets bigger and adds to the debt. so a trillion bucks if you spend a buck a second from right now you wouldn't hit a trillion for 32,500 years. if you spent a million bucks a

day from the birth of christ you wouldn't be at a trillion yet, and the big bang theory of the universe happened 13 billion, 600 million years ago and that is a sparrow belch to a trillion and we owe 16 of those babies if you can't wad that up in your brain and figure out where this country is headed, as i saidness to one guy you have a brain the size of -- if you could take a brain and put it on the edge of a razor blade it would look like a bee bee rolling down i 80. >> rose: you have been living with this for a long time. >> this is the american treasure. i tell you, jefferson was right, he said, if i had -- if a government without newspaper or newspapers without a government i wouldn't hesitate to -- they leave off the last sentence but they must be able to receive them and understand them and people don't understand anything. if the most popular magazine in america is people and us, people are out to lunch, they are not

tracking any of this. >> it is really hard to believe when i left washington having to work for president clinton, we had enormous surpluses, we had a debt to gdp ratio of about 35 percent, today it is about 70 percent, well on its way -- that is net debt, not even a gross debt, it is well on its way to 100 percent, and almost any economist will tell you that when your debt equals the size of the economy then you your rate of growth is going to slow between 1 and 2 percent so the effect is going to be really pretty tough. >> rose: you said early in the conversation every time the reason people are not prepared or have not been prepared, you know, to make the courageous things is politics, politics, politics. they want to be re-elected. does that mean our politics are broken? >> it means that the power of the special interest groups are now, with the supreme court decision about campaign financing plus the stuff going on before, i guess in a couple

of years i it will be by presidt day where if you have 200 million or whatever bucks you can go pick a guy and decide to get him there. the politics are broken because the system has turned into, if this bill is from the republican it must be terrible, if this bill is from a democrat, it must be terrible, no questions asked. the have nonis there, venom is palpable and there and real and the sadness to see -- .. i used to work work with moynahan and kennedy and rib koff and they were great giants, dennis and hatfield, those are all gone we have now people -- >> rose: who is now leaving the senate because of this. >> it breaks your heart and it wasn't -- he is a courageous gal, i mean, strong, tough, good old background of strength, and she just saw that the state convention when they brought up her name that there were engineers from guys who are out

to get her and nobody -- no wonderful politician like that has to go through that. these people are absolutely -- they are as rigid as anybody, they are zealots, a sell lot having for, zealot who forgotten their purpose is great at it and they are great at it and what i would add to that is, when they forget their purpose. >> the elections are no longer in november, the elections are when we have a primaries, particularly for the house of representatives and so you end up with people elected from an extreme right, extreme left, and they are no longer the group in the sensible center that you can negotiate with and do something to get something done, but you can bring together to make those tough decisions. to make the compromises, the honorable compromises you have to make in any kind of way of life in order to advance the ball. >> rose: mike bloomberg said if you talk sense and courageously to the american people he thinks they will respond, do you believe that? >> yes, i do.

i definitely believe it. >> rose:. >> we see it. al and i probably made 200 talks where we talked for maybe 20 minutes, and take questions for anywhere from an hour to an hour and a half, and at the end of that, i don't care if it is a right wing group or left wing group or some group in the middle we get a standing ovation. because people -- we don't do mush, we don't do charts, we simply talk about the facts and that is what people want. they are desperate. >> rose: we are lost unless we do something. >> that is easy. it is the truth, and people understand it, but people are way ahead of the politicians on this. they are thirsting for somebody who is not going to give bs or mush and that's all they see on the tube is just democrats, republicans, the administration, just they know that this isn't true, it is pandering of the first order and they are sick of it. >> rose: it looks like romney will get the nomination for your party does it not. >> i would think so, yes. hopefully. >> rose: you have endorsed him? >> i did, you know, recently, i sent a check for 1,000 bucks,

which is not much these days, it sure was for me, but he -- you know, santorum i worked with santorum, and i worked with gingrich and i would speak for my leader and there is a great leader was bob dole. >> rose: right. >> and i was his assistant for ten years and on the other side was george mitchell and --able and daschle, all leaders and i tell you, there is no real leadership of gutsy, hard, hard, hard decisions to make and as erskine says what we suggest and the reason we get shot to shreds and always there is we are specific as to what will be done is very painful, especially to every single group that testifies before us, 105 groups saying this is terrible, it is unsustainable, it is unconscionable and don't touch ours, grover, i said to grover, he said, my hero is ronald

reagan, who is almost hymnal music in the background, i said, well, ronald reagan raised taxes 11 times in his eight years, grover, what about that? and he said, i didn't like it at all. i said, well why do you think he did it? well, i don't know. very disappointed. >> he did it to make the country run. and this guy grover who was unknown three years ago, if not the fourth most powerful man in america, 95 percent of both house it is. >> rose: signed a mental. >> signed a pledge no taxes under any circumstances unless there is a commensurate cut or reduction in taxes. >> people who do say, i would be prepared perhaps to vote for a tax increase if i was -- if it was confirmed to me that i believe the congress would make the cuts in spending that i believe are necessary. >> yes. and we bought into that, that's why we said the spending cuts had to happen before you have the tax increases, or the tax reforms.

>> rose: bought in the idea you have to lead. >> you can't get into one of these situations like reagan did where you have the i tax increases and never had the cuts. >> rose: he talked about that, i said look i gave a tax increase, i didn't get the spending cuts i wanted. and even though it is like three to one in tacks to cuts. >> you can't solve a problem with revenue alone, it doesn't do anything to change the fact that the demographics of the country are changing greatly, healthcare is growing at a faster rate than the economy, you know, you have got to deal principally on the expenditure side with defense, and with medicare and medicaid and you have got to make social security sustainable for all. >> rose: had the president of the united states as of this date told you what cuts he is prepared to make? >> actually, you know, you have to give him a lot of credit, in this last budget he came forward with he had $380 billion worth of cuts, real cuts that he was specific about in the entitlement programs, he had about another $160 billion.

>> rose: was that enough, as far as you are concerned? >> no, no of i think he need to do more, i know we need to do more, that won't get us there, but he made specific cuts in the medicare and medicaid program that he was willing to do. >> rose: the republicans could see. >> oh yes oh, yes absolutely, in the budget. >> rose: is there going to be as some of my friend in north carolina might say, and your state too? kind of come to jesus moment in 2,013? >> oh, yeah. i think it will. we would hope that -- i think something is going to come between the election and the end of the year when all of this -- >> rose: after the election. >> after the election and the lame duck session but even this morning, at the seminar with mike bloomberg and he is a gutsy guy i admire so much and mario cuomo is there and ed koch, those are gutsy guys, you don't have to agree with them. >> rose: they are not voting in the congress. >> no, they are not but they were gutsy guys when they were leading, and there is very little of that now, it is how do we preserve or attain a majority, that is the key. that is the game. how do we -- what do we do right

now between not anything here, this is all too hot, you are dealing with the aarp and groafer and the defense people and the heritage, i mean, they banded together in this last vote where they just saw this thing actually, i can't believe this thing is up for a vote and it is just a resolution, and they just went crazy, they fanned out, they put these guys to bed and said, and we get these calls now saying, you know, i could have voted for it, but i couldn't do it yet. so it will come. >> rose: now, the mayor, what you have referred to, spoke this morning in an editorial they wrote an op ed piece in wall street journal about class warfare, are we looking at class warfare here because he is opposed to the bucket rule, are you opposed to the bucket rule or not? >> well, no, but i think occupy wall street, somebody asked erskine when that was red-hot, what do you think of this and erskine said, pay attention.

warren buffett is a delightful friend, i cherish that friendship, he is saying some honest things. they pillar in, i am paying less than my secretary in taxes well all you have to do is look at the tax expenditures, over 180 of them, and they are really used by about the top ten percent of the people in america. i mean, they hired the best lobbyists and they got it in there and no over sight over any of them and that what you have got and you try to rip those out of there as coburn took it and said get rid of the ethanol subsidy that is 6 billion bucks and took it right out of the tax expenditures in the code, and grover said that is a tax increase. to which colburn say said that ask ludicrous which i said it is totally deceptive and that is where we are, stuck. >> so you want to say to everybody that eliminating subsidies liketh moll is not a tax increase, it is eliminating subsidies. >> it is backdoor spending in the tax code, it is spending by

any other name, it is no different than spending in the appropriation bills and the people that it benefits are principally people at the upper incomes, if we broaden the base, simplify the code we can literally take rates down to eight percent of the $70,000, 14 percent to 210 and have a maximum race of 23 percent and we can take -- >> rose: there is the tactation on ordinary income. >> this is marginal tax rates and you can take the corporate rate to 26 percent and charlie we would be competitive globally then and compete on a level playing field and you could keep the rates as progressive as they are today. so you handle that problem about whether or not you are favoring the rich or favoring the poor. >> how does our tax system compare to other enlightened nations? >> laughably, i mean it is totally gleks complex, it is social engineering, the home mortgage for a million bucks of interest nobody has that kind of

thing, take it down to 500,000. oh, my god it will be the end of the home ownership in america. that is crazy. and then we say give them 12 and a half percent nonrefundable tax credit and that helps the little guy. if you want to get rid of charitable deduction, no you give it 12 percent nonrefundable tax credit if you want to put something back, put, what rate are you going the raise and if you want it pay for it, it is a very simple procedure, but let me tell you, it is grotesque, and to think that it is used by the richest people in america. my god, i i am sounding like a democrat but only 27 percent of the american people itemize. i had to vote on -- i have. >> rose: 27. >> 27 percent of the. >> rose: itemize the deductions. >> 73 percent of the people don't get the advantage of a home mortgage deduction so if you gave them a credit instead of a deduction, and -- >> rose: what do you recommend with respect to home interest deductions? >> we say. >> rose: take it down to 500

is what you are saying. >> take it to $500,000 as opposed to where it is today if you had a six percent interest rate on a $500,000 loan that is about a $30,000 a year interest payment you have, if you had a 12 percent credit on that, then it would give you 36 $100 credit that would be much more valuable to the average american than the plan that we have today and by the way it would say the taxpayers a hell of a lot of money. >> would you change anything about bowles simpson or simpson-bowles as it was proposed? >> at the time? >> well. >> rose: have you learned anything new that changes your ideas about what you recommended at the time? >> i haven't learned anything new, because i said the minute the groups, the interest groups in america dig in to this 67 page report and see the specifics of what we say, we will be savaged, and they laughed at first and now they are not laughing, so they are getting more savage, in other words, how can you do this? how can you do this to seniors? how

can you do this to veterans? let me tell you, sheer a quick one for you, i am a veteran, i served at the end of the army of occupation. get this. this is less than two minutes, already 2.2 million military retirees, i finally found one the other day i have been looking for i said general where were you on active duty and he said i was never really on active duty, i was in the national guard and the reserves, okay, he is a quote military retiree. they have their own healthcare plan, it is called tricare, the premium is $470 a year and no copay, takes care of all of their dependents and costs you and me 53 billion a year. that is absurd. no affluence testing, no nothing, many of these people have gone into other work, we do things like, you can't have a cola when you retire at 38, your cola will start when you get to be 62. these things, you see and then you get savaged by the

professional veterans of which i am a member, lifetime vfw and the american legion, these are professional veterans, i know millions of veterans who never served more than a year and never left camp beetle bailey and don't know a mortar tube from either end who draw the same benefit as a combat veteran, now let me tell you, so you bring that up, and then you hate veterans, you hate old people, because you say we are going to raise the retirement age to 68 by the year 25th, 2050 and the aarp says how will they be able to prepare for that? well we though they will, four dumb dead heads for god's sake and the stuff that the misinterpretation. >> rose: yes. >> the myths of what we go is really -- and that is what keeps us going, we have effectively succeeded beyond our wildest dreams, because we have effectively pissed off everyone in america. [ laughter ] >> really. and he said, my god --

>> rose: and you have a lovely wife. >> she is the loveliest. >> rose: he is. >> anyway -- >> rose: and she said what? >> she said you have a lilt in your step i have never seen because you have achieved your life goal, you have pissed off everybody in america. she said, it used to be just pockets of people and now it is the whole country. >> rose: everybody. >> and at the same time there are a lot of sensible people i read the column the other day tom friedman saying -- what? >> he knows everything that is happening and he those exactly what we are doing and he is a divining rod, he is absolutely awesomely prescient and on target. he knows that the problems are real, the solutions are all painful, you know,,. >> rose: they are. that is your point. >> they are there. and we can do it and if we do it now, america is going to be able to compete with any nation on earth and if we don't, we are going to be a second rate power before you know it. >> rose: and so what makes you confident that the country, after the election, at the

beginning of january 2013, is going to be prepared, the leadership of the country is going to be prepared, regardless of who is president to do something? even well we are going to try to do a couple of things to make sure that the american people are knowledgeable, we are going to try to run a big social media effort that i think it will go viral when young people see the lack of responsibility of people our age, and the fact that we have made promises that we simply can't keep that we are spending money in areas that are going to leave them with inadequate infrastructure and education system that is producing an inadequate product, a healthcare system that is, you know, like crazy, we spend twice as much as any other country in the world, but our out comes are like 25th to 50th in things like infant mortality and life expectancy and preventable death, they are going to be outraged. >> rose: less and less on unimportant tests than the nation's well-being. >> we score -- i just got back from singapore, we -- in the

u.s., something like less than two percent of our kids score at the most advanced level at reading math, science or writing, in singapore where i was, 44 percent of eighth graders scored the most advanced level. you know, and if you look at our for every 100 eighth graders in america, for every, 100, 38 go to high school and college, 28 -- >> rose: what are they doing we are not doing what are they doing we are not doing. >> we are doing a lot of things, number one, they -- they train their teachers better, they pay the teachers more, they treat the teachers like professionals, like my mom but treated as a professional, when she taught, you know, you know, the schools themselves aren't war zones, but they have real discipline, they made the proper investments in the schools. but it is not always a case of just money. let me give you an example we wanted to do at the university of north carolina we wanted to

do our part to improve k through 12. and to do that, we figured, you know, we were not only part of the solution we were part of the problem because we produced most of the teachers so we wanted to produce, you know, more quality teachers, more math and science teachers, and so i said, surely already some federal programs that can help us do that as it turns out there were some, there were 82, we don't need 82 programs. we do need two or three good ones, charlie. we do $1.5 billion worth of scientific research at unc 1 of the large esest research gliewferts the country, is all of it high value added research absolutely not. neither is the research going on at 3,000 colleges and universities in america that do this research. you know, it reminded me of this nobel prize winning scientist earns rutherford when his nobel promise he was running out of money he turned to his team and said, hey we are running out of money, now we have to start thinking. well that is what america is, we are running out of money, we have got to start thinking, we

have to use the resources we have more wisely, we have to make choices, we have to have priorities. that is what any organization -- >> one common thing in america is common sense. but you do what you can, now he is on the board of facebook and don't think he is working, worming his way into the woodwork over there, because he has got young people listening and he will be doing something on their platform. >> rose: social media -- >> yes, use it. people will know what the problem is. but what you do with your own gambit of life. i am on the commission of presidential deabilitys we had a wonderful meeting a couple of weeks ago and we said we are not going to let the debates devolve into okay tonight we are going to do foreign policy and the first question is, who is the prime minister of -- some country that no one has ever heard of an then you have a gotcha. so. >> rose: i promise you if if i am doing a debate that is not the first question. >> we have a great emeritus moderator, jim lehrer, and old

friend of yours, but the point is, we are going to guide these people into issues like debt, immigration, what are you going to do with the burning issue, social security? and guide them, somebody said then aren't we off into policy? i said no if we don't do that we are off into mush. so then we have joined the rest of the mush peddlers, get this presidential and vice presidential debate, we haven't been sued for a long time, ralph was the last one we make them show they have to have 15 percent of polling in favor of it in all six major polls and then get to the guts of the issue, so the american people can hear these two people talk about what the hell you are going to do about the debt, what are you going to do about immigration? what are you going to do about solvency of social security and all of the burning issues of the day. and without that, you have got mush. >> rose: all right. and you think that can happen, that kind of debate. >> i will pray that will happen, yes, i do. >> rose: i will come back, how

are you going to use social media? >> it is the most extraordinary way to communicate that i have ever seen. and having lived on a university campus over the last six years, i have seen how a simple message can go viral. and how it can spread so quickly from one person to another, from one campus to another, from one state to another. and what we are going to try to do is to put this message out there, about what our problems are, that our problems aren't waste, fraud and abuse our problems aren't, you know, nancy pelosi's airplane, our problems aren't foreign aid, our problems are real, and it is the amount we are spending on definite, the amount we are spending on the entitlement programs and the fact that we have a we have a te that is inefficient, ineffective and anti-competitive on a global basis and we are going to put that in words that people can understand. i give you an example of one of the things that people have tweeted around the country that i have said. you know, i told a story the

other day talking about the defense budget and i said you know, it is amazing, you know, we have this, america has this treaty with taiwan that will protect them if they are invaded by the chinese. i said there is only one problem with that, we will have to borrow the money from china to do it. and we will send that kind of message around the country so that people will know how ludicrous it is and the fact we have got to elect people who are willing to make the tough choices. and we have got to punish the people who are just going to do mush and just going to, going to fake a walk on the big tough issues that go around today. >> rose: two things. number one, is that the rest of the world is watching, the chinese are watching. >> yes. >> rose: they are watching, can the united states get its house in order? right? the second -- >> they are our banker. >> rose: exactly. they are the bank store they have a special interest, as they say. the other thing that is clear is that a country cannot maintain

its superiority in geo politics if it does not have a strong economy. >> well, the chairman of the joint chiefs of staff has said admiral mullen has said, many times that our greatest national security problem is this debt. because it will consume every dollar of resource we have. we won't have it to invest, to keep our country safe, we won't have it to invest in education, we won't have it to invest in infrastructure. the country we will leave our children will be worse off than the country that we inherit. and the real hot ba button is healthcare and it doesn't matter what you call it. you can call he it obama care, elvis prettily carolina, i don't carolina, it really won't work, there is a serious business all you have to do is use your bean, taking care of preexisting conditions, i have a three-year-old who lived to be 60, people who choose to do booze and tobacco and designer drugs are all lining up now, you know, half fried, you have one

person in america that weighs more than the other two, which is obesity and you have got diabetes, a and b. you have got a guy who can buy this studio and gets a heart operation for 200-grand and never gets a bill because he is over 65. you have got to do something with tort reform and i am an old trial lawyer you have to do something with doctors you have to do something with providers, and you have got to do something with hospitals to make them keep one set of books instead of two or three to see how much they can get out of the feds and then you do something with medicaid and the states, quit playing the game to see how much money you can get out of the federal government. now that is really a pleasant scenario, that way you can inflame a whole group of providers, hospitals, doctors, lawyers, that is what is out. there let's just be serious. but you can't get there unless you do that and we said that. we put that in the 67 page report, get their eyeglasses on that one and say holy, good god, these guys are nuts.

and that is what we -- >> rose: you have got the healthcare before the supreme court now, and they may declare the individual mandate unconstitutional. but speak more, not to the merits of the supreme court issue, but to the idea of the cost of healthcare and whether it is deficit -- >> we think it can be addressed. in a responsible manner. >> rose: the proposal that was passed by the congress or something else? >> yeah. i think -- i think with some additions. >> rose: because they are going to be made opposed to obama care beyond the mandate they dealt with access to access but not cost containment. >> i think that is basically fair. basically the difference in the two sides is as follows. if you look at medicare and medicaid, it cost about six percent possess gdp today it will be ten percent before you know it.

even is trying to slow the rate of growth, the democrats believe that the affordable healthcare act, obama care, whatever you want to call it will, with the cuts in there, and with the pilot programs they have they believe that will slow the growth of gdp to one, we did not believe that, that's why we put in the $500 billion of additional cuts to try to slow that rate of growth and said if that doesn't work, then what we should do is look at more drastic step which would include a premium support plan. paul ryan in his budget does a couple of things. first of all, on medicaid, he he believes that we should block grant that to the states on the theory that one size doesn't fit all, and that the governors can cover more people at lower costs because they can individual lies it. we said hey look that may be right. but it is a big change in the healthcare law, so why don't we test market it in ten states first, let's test market it in a big state, small state, rural

state, urban state and if it works go to it, it is being tested in rhode island and working quite well, washington state is next, so we will see, but, again, i am a business guy so i believe you ought to test things. on medicare, what wall wants to do for people that are under 55, what he originally proposed was that for those folks, you know, unless he calls it a premium support plan but basically it is a defined contribution plan as opposed to a defined benefit plan. >> rose: some call it a voucher plan. >> i don't think that is fair. it is a defined contribution plan and no different than what most big companies have done. you couldn't control the costs of the benefits that you were providing your employees, so instead you gave them a defined contribution and passed on the increased costs to the employees. that is what he wants to do. he has now come back and modified that with a bill with ron widen, a democrat from oregon who basically says medicare can compete with private plans for people 55 --

>> you want to keep your medicaid, you can? >> yes. but only if it is able to to be competitive, otherwise you have to pay and you have a cap, a gdp plus .5. >> rose: you think healthcare will be a huge issue in the 2012 election? >> oh it has to be or else -- because it is the one driver, it is the total biggest driver of the fact that if you don't -- if you don't capture it and rein it in, it will be on automatic pilot and will squeeze -- i always say to people what do you love? well, i love culture, education, homeland security, to keep us safe, defense, i love all of these things, i said great all of though things will be automatically squeezed out by this program where we can't touch it because of the power of these groups that i just named, and that is a disaster. and that is where you are headed so if healthcare isn't the topic

of debate, this year or next year or forever, then just, you know, haul up your shorts and head for the hills. >> rose: do we need to have a first priority for the new president whether it is reelection of barack obama or whether the nominee is mitt romney and he is elected, call for some kind of coming together immediately as the first order of business for the president and the congress? >> people would be thrilled if the call went out, even if nothing came to fruition, just the call, somebody saying that would be a beginning of some healing that we are all going to get in the room and somebody is going to say, one of the republican leaders wrote up the word compromise and he said or she said, i don't know that word. well if you don't know the word compromise, get out of the congress, because you can compromise an issue without compromising yourself and it makes no sense, but if that, whoever the president is, would say that we are going to gather -- >> rose: the first order of

business, the highest priority for this presidency is to do something about the debt? >> it probably can't happen -- >> rose: by the white house? >> and like overnight. the realistic big problem is there is such a lack of trust in washington, it took our commission where we got a majority of republicans and a majority of democrats to volt for it, it took us months just to build up trust. when i negotiated the balanced budget with speaker gingrich and leader lott it took month again will for us to establish a kind of trust we had to -- there is an absence of trust in washington. so, yes, bring the people together, get it started, but you can't expect it to happen overnight. >> rose: how do you feel about that trust? >> just by not walking out of the meeting and using -- taking political advantage of the other side because you learn something that they would actually do that is politically difficult.

you know, you have got to respect the fact that this is tough -- you know for one side or the other. it is going to be tough for the republicans to concede the fact that we have to have some additional revenue it is going to be tough for the democrats to make the kind of concessions you have to make to make social security sustainably solvent but we have to do these things in order to put our fiscal house in order. for our kids. >> rose: i leave it there. thank you. very much. >> you have left us -- you do what you can and you do it beautifully. erskine does, we do and there isn't a soul in your audience that can't do something instead of just sitting back and saying this thing is, i don't know where we are head headed, you can go to your congressman's next town meeting and when he or she gets up and babbles into the stray pours, that they are going, i have vapors, waste fraud and abuse foreign aid, so and so, forget it .. say sir or madam what are you going to do

with medicare and healthcare first, and then medicaid and then the solvency, not the cutting of social security, the solvency? and defense? which is just real life. just use, just figures we check our figures all the time. are we right what we tell the american people? and we are right. we don't have to be listened to, but for god's sake there isn't a soul that can't get off their butt and do something to make america better and forget that you are a member of the republicans or the democrats or the tea party or the afc afl-cio you are citizens first and if you have forgotten that we are in for a hell of a ride. charlie when we first started off on this and we said yes to the president we would lead this commission we thought we are doing this for our 15 grandchildren but the more we looked at the numbers the more we realized, we weren't doing this for our grandkids, we weren't even do it for our kids, we were doing it for us.

we have got to face up to these big problems if america is going to be competitive in this new global economy. >> rose: thank you. erskine bowles and alan symptom, it is a pleasure to have you here and i am pleased we had an opportunity to look at the central question facing america as we approach a new presidential election to be decided in november 2012. thank you for joining us. see you next time. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org